Put down the 10-K filings and the stock screeners. It's time to take a break from the traditional methods of generating investment ideas. Instead, let the crowd do it for you.
From hedge funds to individual investors, scores of market participants are turning to social media and market data to figure out which stocks are worth watching. It's a concept that's known as "crowdsourcing," and it uses the masses to identify emerging trends in the market.
Crowdsourcing has long been a popular tool for the advertising industry, but it also makes a lot of sense as an investment tool. After all, the market is completely driven by the supply and demand, so it can be valuable to see what names are trending among the crowd.
While some fund managers are already trying to leverage social media resources like Twitter to find algorithmic trading opportunities, for most investors, crowdsourcing works best as a starting point for investors who want a starting point in their analysis.
So let's leverage the power of the crowd to take a look at seven of Wednesday's most active stocks.
- Nearest Resistance: $9
- Nearest Support: $8.60
- Catalyst: Merger Update
Leading off the list of heavily-traded stocks is drugstore chain Rite Aid (RAD) , a stock that's up 3.7% as of this writing on a merger update. Rite Aid is reportedly days away from closing its pending acquisition by Walgreens Boots Alliance (WBA) , a holding in Jim Cramer's Action Alerts PLUS portfolio. This deal is set to pay Rite Aid shareholders $9 per share.
Rite Aid is currently within 4% of that buyout price, on its way to close the gap to $9. Shares traded for as much as a 30% discount to the cash price as recently as November, but at this point, most of the money has been made on the Rite Aid trade. Markets are pricing in an 87% probability of the buyout getting done.
- Nearest Resistance: $13.75
- Nearest Support: $12.50
- Catalyst: Supplemental Dividend
Ford Motor (F) is seeing a big-volume trading session Wednesday, down around 2% following the announcement that the firm will pay a $200 million supplemental dividend to shareholders in the first quarter, bringing the total to 20 cents a share. Ford has become a high yielder, paying out a 4.78% indicated annual dividend check to investors at current price levels.
Ford looks attractive from a technical standpoint. That's because shares have been bouncing their way higher in a tightly-defined uptrending channel since November, catching a bid at every test of the bottom of that price channel. From here, look for a bounce off of support as a buying opportunity in Ford.
- Nearest Resistance: $63
- Nearest Support: $58
- Catalyst: Keytruda Use
Pharma giant Merck (MRK) is up 4.75% today, rallying following Tuesday's news that the FDA had approved a priority review of its supplemental Biologics License Application for Keytruda plus chemotherapy as a primary treatment for advanced lung cancer. The FDA put a May 10 Pdufa date for the treatment, potentially putting Keytruda on the market for that use much earlier than Wall Street had been expecting.
Technically speaking, Merck's price action looks attractive. Shares have been forming a textbook example of an ascending triangle pattern, a bullish continuation setup that triggers a buy on a push through resistance up at $63. Shares are within grabbing distance of that breakout level this week.
- Nearest Resistance: $32
- Nearest Support: $28
- Catalyst: Restructuring
Williams Cos. (WMB) is trying to catch a bid following a gap-down on Monday spurred by news that the company is reviewing its capital structure. While the decrease this week isn't huge, the technical break through WMB's uptrend is material.
Williams had been bouncing its way higher in an uptrend since February, but this week's drop means that the trend has come to an end. WMB bulls should wait for shares to establish some semblance of support again before adding onto any positions.
- Nearest Resistance: $23.50
- Nearest Support: $22
- Catalyst: Technical Setup
The good times are rolling at Micron Technology (MU) , a stock that's up 1.33% on huge volume this afternoon thanks to a bullish technical setup. Micron has rallied 82% in the last 12 months, bouncing its way higher in an uptrend that's still very much intact in 2017. From here, it makes sense to buy the dips in Micron. Every test of trendline support since mid-May has provided a low-risk, high-reward buying opportunity in this stock.
U.S. Oil Fund
- Nearest Resistance: $12
- Nearest Support: $10.25
- Catalyst: Spot Oil
The U.S. Oil Fund (USO) is seeing big volume mid-week, up 2.5% as oil prices get bumped higher this afternoon. USO is investors' easiest way to get exposure to oil -- this exchange-traded fund ebbs and flows with the daily changes in crude oil prices. That's made USO a popular ETF in the last year, as oil prices have rebounded and this fund has made its way higher.
While USO has been correcting a bit since the start of 2017, that correction is happening within the context of an uptrend. In other words, oil bulls should wait to buy USO at its next test of its uptrend.
- Nearest Resistance: $5
- Nearest Support: $3.75
- Catalyst: Q3 Earnings
Finally, grocery distributor SuperValu (SVU) is getting swatted lower on big volume this afternoon, selling off 8.9% as I write following third-quarter earnings results. SuperValu reported adjusted earnings of 5 cents per share, missing the 9.5-cent profit that analysts were expecting for the quarter, on average. While revenues came in better than expected, that small victory wasn't enough to make up for the profit miss.
Technically speaking, SVU looks like a stock to avoid. Shares have been in a downtrending channel since last summer, swatted lower on every test of the top of their channel. With SuperValu's price trajectory currently down and to the right, it makes sense to avoid this stock until shares can break free of their trend channel.